The bank that helps rich kids buy London homes

LONDON (Dec 17): The pricey property market of London has caused even the children of the wealthy to need financial help.

Bloomberg reports that Scottish finance veterans Ray Entwistle and Graeme Hartop began with this bet in 2015, leading to the founding of the private bank Hampden & Co. Children from well-off families, especially young adults just beginning their first jobs, struggled to purchase their first homes in London.

Their solution was to offer mortgages that allow the older generation help the younger. Guarantor mortgages let one borrower backstop the credit of another, and are an older form of mortgage that had in recent times, fallen out of favour. It is now a favourite at Hampden’s.

The publication cites an example of fashion designer, Annoushka Giltsoff who wanted to buy a house in Brook Green, a leafy neighbourhood in West London. Without sufficient outgoing income to support a loan, Hampden banked her older sister Katushka, accepting her guarantee to write the mortgage for Annoushka.

A new twist to this model by Hampden allows a parent to pay down a portion of the loan alongside the son or daughter. The private bank offers interest-only loans, enabling families to draw from different sources of income in order to refinance properties.

Offering a flexibility that many big lenders cannot match, Hampden adapts to the peculiar needs of affluent families. Based in Edinburgh, the bank also uses its balance sheet to fund multi-property and bridging loans to let clients sell real estate before they buy.

“The property market is creating challenging conditions for many, and the way that people make and hold money is becoming more diverse,” Hartop, Hampden’s chief executive officer was quoted as saying.